Shell Offshore, a subsidiary of Royal Dutch Shell, has announced the early start of production – around one-year ahead of schedule – on the first phase of Kaikias, an economically resilient, subsea development with estimated peak production of 40,000 barrels of oil equivalent per day located in the US’ Gulf of Mexico.
Shell has reduced costs by around 30% at this deep-water project since taking the investment decision in early 2017, lowering the forward-looking, break-even price to less than $30 per barrel of oil, the company said in a press release.
“We believe Kaikias is the most competitive subsea development in the Gulf of Mexico and a prime example of the deep-water opportunities we’re able to advance with our technical expertise and capital discipline,” Royal Dutch Shell Upstream Director Andy Brown said. “In addition to accelerating production for Kaikias, we reduced costs with a simplified well design and the incorporation of existing subsea and processing equipment,” he added.
Kaikias is located in the prolific Mars-Ursa basin around 210 kilometres from the Louisiana coast and is owned by Shell (80% working interest), as operator, and MOEX North America LLC (20% working interest), a wholly owned subsidiary of Mitsui Oil Exploration.
Royal Dutch Shell pioneered the deep-water industry 40 years ago. In the first quarter of 2018, Shell deep water produced around 731,000 barrels of oil equivalent, globally, per day. Over the past four years, the company’s sharp focus on competitive growth has led to planned cuts of around 45% on average for both global deep-water unit development and operating costs.